Schumer, Freshmen Senators Unveil New Tax Cut Package For Middle Class

Schumer, Freshmen Senators Unveil New Tax Cut Package For Middle Class

Today Senators Charles E. Schumer, Sherrod Brown, Bob Casey, Amy Klobuchar, Claire McCaskill, Jon Tester, and Sheldon Whitehouse introduced the "Middle Class Opportunity Act of 2007" which will provide tax relief for middle class families to help them manage the crunch in balancing work and family, save for their retirements, and achieve their aspirations. This legislation is designed to accomplish four primary goals: help parents start a family; help families avoid unfair tax penalties; help families send kids to college; and help families care for their aging parents. The Act would provide approximately $80 billion of tax relief over four years (2007-2010), above the one year of AMT relief in the President's budget.

"The years of favoring the wealthy and big oil companies are over," said Senator Schumer. "This bill makes good on our promise to provide real relief for middle class families. Everyone should be able to afford a house, raise a family, help their kids get ahead with a college education, and care for their elderly parents without having to take on a second job or extra shifts."

The Middle Class Opportunity Act has four components:

# Helping families with young children via a doubling of the child tax credit in the first year and expansion of the dependent care tax credit;
# Helping families avoid unfair tax penalties by providing relief from the individual AMT;
# Helping families send kids to college via the simplification, consolidation, and expansion of the various tax benefits for higher education; and
# Helping families care for their aging parents through a new elder-care credit

"Corporate-driven myopia on our economic policies has favored the wealthiest one percent for too long. These tax cuts are an important first step toward directing policies in Washington that support our nation's middle class," said Senator Brown.

"For too long, our tax policy has benefited the top one-percent more than the middle class," said Senator Casey. "With rising health care costs, energy costs, education costs, and an encroaching AMT tax increase, we must act now to provide much needed tax relief for the middle class."

"Our proposal offers real solutions that that will make a real difference in the pocketbooks and wallets of working families," said Senator Klobuchar. "It puts the interests of the middle-class front and center, and it does so in a fiscally responsible and appropriate manner."

"For the past six years the President has cut taxes for millionaires and as a result, corporate executives are making out like bandits by way of economic growth limited to Wall Street while the rest of us still feel the squeeze," Senator McCaskill said. "The middle class is the real engine that drives our economy. It's time we reroute those tax cuts to give the middle class a break in a way that helps fuel our economy for all Americans."

"The vibrant middle class that made this country great has been abandoned" said Senator Tester. We need legislation that will help folks that are struggling to pay for health care, putting kids through school, taking care of an aging parent, or maybe all three. This bill does just that and it's the kind of policy that the people of Montana sent me here to support."

"Working American families know they're not getting the help they need to get by. This administration's response? Cut taxes for millionaires," Senator Whitehouse said. "We have a better idea. This bill put extra money in middle class families' pockets when they need it the most: when a child is born or starts college, or when a family makes the choice to care for an aging parent. That's common sense tax relief, and I'm proud to support it."

"The engine of the economy is the middle class and when they succeed, America prospers. These tax cuts will help middle class families get ahead and attain the basic levels of wealth and security that they deserve," said Anne Kim of Third Way, who worked with the Senate offices to develop the tax cut package.

Middle class families are struggling to get ahead while juggling the expenses of childcare, sending kids to college, and taking care of elderly parents. The following components of the bill are designed to provide middle class families with the tax relief necessary to help them overcome these financial hurdles, achieve their aspirations and manage the balance between work and family:

Doubling the Child Tax Credit in the First Year: Middle class families spend an average of $20,000 on a newborn child before he or she turns two. This bill would double the child tax credit to $2,000 in the first year of a child's life, or in the first year after a child is adopted, to help parents defray the expenses of a new baby.

Expansion of Dependent Care Tax Credit (DCTC): The bill would extend the Dependent Care Tax Credit to cover 35 percent of qualified childcare expenses for families earning up to $75,000.

Relief from the Alternative Minimum Tax: Under current law, families with incomes between $75,000 and $100,000 are in danger of falling under the AMT for the first time in 2008, sticking more than 20 million taxpayers with an average tax increase of $1,000. This bill would extend AMT relief through 2008 to prevent these families from falling under the AMT.

Higher Education Tax Relief: This bill will help cut through the confusion that parents face when trying to pay for college by consolidating the three major tax deductions and credits for higher education into one easy-to-understand tax credit that will cover tuition, fees, and even textbooks. The credit can be used for undergraduate or graduate education, saving middle class families up to $2,500 per student.

Caring for Aging Parents: Under current law, only families who have elderly parents living with them are eligible to claim the dependent care tax credits. This bill would allow families to claim the dependent care tax credit or the earnings exclusion under a dependent care assistance program for qualified dependent care expenses paid on behalf of an aging parent who does not live with the family. Given that nearly half of caregivers contribute financially this care, this would save families an average of $200 per month.

http://schumer.senate.gov/SchumerWebsite/pressroom/record.cfm?id=269558